The State Duma Committee on Education and Science held parliamentary hearings
"On the Legal Backing of the Financial Regulation of Scientific Activity in
the Russian Federation."

The hearings were attended by members of both houses of parliament and by
representatives of basic science, higher academic institutions, ministries and
departments, the Russian Agency for Patents and Trademarks, academic villages,
state science centers, and innovation firms. The main current problem was
defined by Aleksandr Shishlov, the committee's chairman: Legislation on Russian
science is lagging hopelessly behind practice, and science is suffering from a
chronic shortage of funds.

Shishlov suggested that gaps in legislation have nullified initiatives for
special targeted funding, the creation of a competitive atmosphere for
scientific projects, and other innovations. Our scientists' hopes for the kind
of grants that finance science projects in most other countries were also
groundless. Their very definition in our country is inconsistent with
international standards. The main source of grants in the country, the Russian
Foundation for Basic Research (RFFI), cannot even provide adequate funding for
VUZ's [higher academic institutions]: The Statute on the RFFI says that the
foundation will support only scientific organizations, and any VUZ, according to
existing laws, is "non-scientific." As a result, the VUZ brain drain
has tripled, according to the World Bank's records, in just the last two years.
The monetary equivalent of this is $5 billion a year--five times the annual
budget of the entire Russian educational system!

Scientists are also falling through the financial cracks in many fields on
the investment front. Deputy Chairman Gadzhimet Safaraliyev of the State Duma
Committee on Science and Education had good reason to compare the situation in
domestic higher education to a battle for money.

Annual budget increases for "basic research," "science,"
"salary raises for academic degrees," and other items seem to be
planned, but all of the budget items actually are underfunded year after year.
This is the precise reason, the deputy reported, that the State Duma requested
the Comptroller's Office to find new sources of funding for science. This alone
increased scientific allocations by almost 20 percent (from 33.9 billion rubles
to 40.2 billion).

According to Safaraliyev's estimates, about 50 percent of the economic growth
of developed countries is now based on new technical and technological
achievements. Russia will have to systematize all channels of scientific
investment more thoroughly if it does not want to be left behind. With a view to
this, a blueprint was drawn up in the State Duma to turn science into a
"system for the production of knowledge." To this end, the legislators
will have to come up with a flexible but strict definition of the legal status
of budgetary and extrabudgetary resources (grants, subventions, and subsidies)
and amend the customs and tax codes.

Privatization of Development Projects

Aleksandr Kulagin, the deputy minister of industry, science, and technology,
also discussed the search for financial resources for science. The main thing,
in his opinion, is that the state accreditation of the country's whole
scientific plant must be regulated by legal methods. In the last five years,
2,6000 (of 2,800) scientific organizations were accredited. In other words, many
establishments failed the test because they could not satisfy the elementary
requirements of the Law "On Science" (an academic council and 70
percent of total expenditures on science) and consequently have no legal claim
to state funding. Now the second phase of this inventory must be undertaken:
More specific decisions on the feasibility of continuing to support
"negligent" scientists at state expense.

The alignment of scientific forces, meanwhile, is no longer in the state's
favor. A comparison of the numbers of state and private institutes,
universities, academies and so forth reveals disturbing indications of the state
sector's losses. Automotive engineering and the pharmaceuticals industry, for
example, with all of their scientific research institutes and design bureaus,
have been privatized in their entirety, and the chemical industry is 98-percent
privatized. These examples of the reapportionment of scientific property raise
an important question: Is the state the immediate client of institute
development projects if their scientific results are appropriated by
shareholders?

Actually, this was an inevitable outcome. What else could the state expect
after failing to meet its budget commitments for more than 10 years? The number
of specialists conducting scientific research has been reduced by more than half
since 1990, when there were 1.9 million of them, and their average wage has
dropped to $65 a month. To rectify the situation, the government, according to
A. Kulagin, is busy drafting a new law on state orders for scientific and
technical products and amendments to the Law "On Science."

Presumption of Innocence

According to Mikhail Strikhanov, representing the Ministry of Economic
Development and Trade, the increasing commercialization of research is the main
reason that a more precise definition of scientific activity is needed. The
market is rapidly separating education from science in the legal and financial
sense. In the overall structure of expenditures, VUZ science has suffered a
6-percent decline "in monetary terms." Given the low status of
science, our country could, according to this official, "utterly lose the
battle for the domestic professor, and then there will be no one to do research
here."

The normal funding of science will also necessitate the amendment of the tax
and budget codes to simplify the economic classification of state expenditures
in budgets. The present system of classification is so detailed that the process
of taking a simple inventory (which has to include every minor piece of office
equipment) has become ludicrous.

The government's proposed methods of financing salary increases for
scientists by means of staff cuts evoked considerable criticism at the hearings.
The hope that grants would solve the problem, however, was dispelled once again
by RFFI administrator Vladimir Minin. The basic premises of the grant, he
asserted, still have not been recorded in legislation. Meanwhile, all of the
scientific competitions for grants, which the government seems to regard as a
panacea, currently are being conducted in accordance with the Law "On
Supplies"--as if the grants would be awarded for deliveries of potatoes
instead of for science.

Innovation Strategy Is the Solution

Academician Viktor Shevelukha, the deputy chairman of the public scientific
council of the Duma Committee on Science and Education, had difficulty, judging
by the reaction in the auditorium, cutting off the applause for a more effective
way of developing and augmenting the science budget. This, he suggested, would
necessitate a strategy for participation by the scientific community in the
augmentation of national wealth. Judging by world experience, only an innovation
strategy can produce high growth rates. The reordering of scientific priorities
will be necessary if innovation exceeds the present 0.5 percent of the total and
results in substantial profits from the sale of high-tech products.

Shevelukha also proposed the institution of personal pensions for scientists
making an outstanding contribution to technological and economic development.
Many of the people attending the hearings agreed with his criticism of the
state's current stance, presupposing the appropriation of all of the scientific
products of developers. The return on intellectual property, in his words,
"must include a share of the profits for the scientist and his right to
collect dividends on the sale or rental of the property."

Defending the economic model focusing on innovation, Shevelukha said that
"the Ministry of Education could already be adding 40 billion rubles to the
budget if 50 percent of the unutilized scientific potential at VUZ's could be
mobilized for the development of science."